EIS – Last chance to ‘carry back’ to 2017/18

As we approach the end of the tax year, access to the carry back facility is often a key consideration for advisers and investors when selecting an EIS investment.

It is possible to carry back all or part of an EIS investment to the preceding tax year as long as the limit for relief is not exceeded for that year. This means an investors income tax relief can be applied to their income tax liability in the preceding year, in this case 2017/18.

The ability to carry back feature can be important to investors for various reasons. For example, a one-off event may have resulted in an unusually high income tax liability last tax year and may wish to use their income tax relief against this liability.

The significant changes to the EIS landscape since the to the introduction of the ‘risk to capital’ conditions have been well documented. One arguably negative change is length of time taken for subscription to be fully deployment. It is now very common place for full deployment to take up to 18 months.

Through their experience with renewable energy and other asset backed EIS investments many investors have become accustom to full allotment taking place on a set date, typically just before the end of the tax year. Investment managers and advisers should continue to work together to re-educate those investors who are now looking to renter the market.

Although the trend is towards longer deployment timeframes there are significant differences between funds in the market. It is therefore vital for EIS investment managers to engage with advisers and communicate their deployment plans. This enables advisers to make an informed decision as to whether the EIS investment fits a client’s specific planning need. With the correct information it is still possible for investors to benefit from this important feature of EIS.

For those investors/advisers looking to utilise carry back the first close date of the Mariana Growth EIS Fund will be 29th March 2019. A full allotment will take place this tax year (2018/19) allowing for carry back to 2017/18.

The Fund offers investors the opportunity to invest into a portfolio of EIS qualifying companies across multiple sectors. Our current preferred sectors include Hydroponics, Waste Management and UK Construction. The fund is targeting a return of £2.00 per £1.00 invested and will only invest into companies with HMRC Advance Assurance.  100% of investors subscription (net of adviser fees) will be invested into EIS qualifying companies.

For further information, click here or 0207 065 6699

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